Australia’s decision to ban Chinese firms from the local rollout of 5G mobile networks will lead to more costly consumer phone plans, experts say. The decision, made over national security concerns, will force telcos to purchase equipment from rivals whose prices are up to 30 per cent more expensive.

Further, the experts say the ban could be the first of others that might also extend to end-user devices such as smartphones, portable mobile modems, and other internet-connected devices that are made by Chinese companies and used by Australian consumers and businesses.

“The government considers that the involvement of vendors who are likely to be subject to extrajudicial directions from a foreign government that conflict with Australian law may risk failure by the carrier to adequately protect a 5G network from unauthorised access or interference,” then-acting home affairs minister Scott Morrison and then-Communications Minister Mitch Fifield said in a joint media statement, amid a leadership crisis in the Liberal party that saw Senator Fifield resign and Mr Morrison voted by the party to become Australia's 30th prime minister.

On Friday, Huawei released an official statement saying the decision was "politically motivated, not the result of a fact-based, transparent, or equitable decision-making process", and that it "denies Australian businesses and consumers the right to choose from the best communications technology available".

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The Global Times newspaper in China reported that Huawei was considering legal action.

"Australian government has seriously violated the principles of fair competition and non-discrimination in free trade, and Huawei will take legal measures to safeguard its legitimate rights and interests,” the company said in a statement to the Global Times on Thursday.

Paul Budde, an Australian-based telecommunications consultant, said the ban would increase the cost of building 5G networks in Australia and that those costs would be passed on to consumers.

“In the case of networks, this could increase prices by 30 per cent or more and in the end it will be the consumers [who] will have to pay for that,” Mr Budde said. “Obviously the telcos will absorb some of that.

“A 30 to 40 per cent increase does not mean a 30-40 per cent rise in retail price but a significant part will have to be passed on because the telcos' margins are so thin, meaning it will be a difficult job for operators to make their business model and business plan stick with consumers. The end-user price [to use 5G] will have to be more expensive.”

Paul Budde hopes that the Coalition government's NBN review will be based on vision and common sense, not politics.Credit:Brock Perks

Huawei and ZTE are able to keep costs low and have a competitive advantage over their rivals due to China’s cheaper labour, large investments from government, and the Chinese government being one of their best customers, Mr Budde previously told Fairfax.

He said Thursday’s decision would mean Australian companies would now need to use companies that made similar equipment, including Nokia, Ericsson and Samsung.

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“Those are the most likely companies that could step in in that respect,” Mr Budde said. “Not many others are left because the two Chinese companies have killed the others.”

While Mr Budde said that there had been industry discussions on how to reduce other equipment maker’s cost gap — with there possibly being “a little room to manoeuvre” — the companies were now in a prime spot “to gain back some of their lost business”.

On the government’s concerns, Mr Budde said he could understand why the decision was taken.

“The situation in China is one that is trying to utilise Chinese companies and Chinese people around the world to be part of the Chinese doctrine,” Mr Budde said. “I can clearly understand why governments are getting a little bit nervous.”

But he said that by extension, the ban might also have to apply to end-user devices.

“The end-user devices are now as much as part of the network as the network itself,” Mr Budde said. “They are intelligent devices and can be manipulated and hacked. They are no longer dumb terminals at the end; they are an intelligent terminal we have in our hands and pockets.

“If you stick to a policy where you say you are worried about the political situation being a threat to our security because the Chinese ask Chinese companies for loyalty first, then it must follow that the threat applies across the network and yes, you will also have to ban end-user devices.”

Peter Coroneos, regional head of the Asia Pacific Cybersecurity Advisors Network (CyAN) and former head of Australia's Internet Industry Association, agreed.

“If you are going to put a Chinese company’s device on the edge of the network [and have a ban at the core] then I don’t think you can treat that as a separate issue,” Mr Coroneos said.

“You can’t just say, ‘We are going to protect the core’. The analysis cannot stop at the core.

“The analysis really has to look at everything that might be attached. We then open Pandora’s box," he said.

"Are we going to be subjecting every [internet-connected] device imported into the country to the same kind of analysis that has been applied to 5G equipment? If the answer is ‘no’, then someone might reasonably ask, 'What is being achieved here?'. I’m not advocating for that, but I do think government will need to be consistent and you can’t treat the core in isolation.”

"With differing views within my members — which include Huawei and ZTE, Ericsson, Samsung and Nokia — I do not have a comment on behalf of the mobile sector," Mr Althaus told Fairfax.

The head of telco industry body the Communications Alliance, John Stanton, expressed similar sentiment, pointing to his members also including companies that were and were not subject to the 5G ban, as well as telecommunications companies that had different views on the matter.

"Telstra are less exposed to the decision and are therefore likely to be more sanguine than those who have thinner margins," a telco industry source told Fairfax on the condition of anonymity, adding that at the end of the day all telcos were "focused on the interests of their shareholders, not the nation or consumers".

Other issues the telcos have been discussing behind the scenes are whether Ericsson, Nokia and Samsung will have the local "capacity" to handle building each carrier's 5G network with Huawei and ZTE removed, or if it will prioritise long-term partner Telstra, giving them a leg-up in the 5G race.